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LONDON (Reuters) - Britain's banks and other financial firms are at their most optimistic for almost 17 years, according to an industry survey.

Some 59 percent of UK financial services firms said they felt more optimistic about their business situation, compared to 6 percent who were less optimistic, according to the latest quarterly CBI/PwC financial services survey, released on Monday. The positive balance of 53 is the highest since December 1996.

The survey, covering the three months to early September, also showed a net 24 percent of financial firms increased staff in the period, the biggest rise for six years.

A net 14 percent of firms expect to increase staffing again in the current quarter.

The CBI/PwC survey is based on the balance of firms reporting an increase and those reporting a decrease. The survey findings indicate about 10,000 jobs were added in the third quarter and another 2,000 will be created this quarter, taking UK financial services jobs to 1.14 million, CBI/PwC estimated.

Business volumes fell in the latest quarter, however, mainly in banking. The CBI said 22 percent of financial firms reported a rise in business volumes, but 32 percent said they were down. A big majority of firms expect volumes to increase this quarter, it said.

"Banks' optimism is increasingly buoyant despite seeing a slight seasonal blip in commercial and industrial volumes. Activity and profitability are expected to grow as the economy recovers, and investment in new products and infrastructure is increasing," said Kevin Burrowes, PwC's UK financial services leader.

Profitability rose for the fourth consecutive quarter, as companies managed to offset the fall in business volumes by increasing their margins, the survey showed. With costs expected to fall, profitability should increase further in the current quarter, firms said.